Tuesday, Valeant ($VRX) CEO J. Michael Pearson said his company was close to luring the 25% of Allergan ($AGN) investors it needs to call a special meeting, where it believes it can shake up Allergan's board and dismantle its poison pill defense to make way for a takeover. And now, the Canadian pharma may have just picked up some more support.
Hedge fund Paulson & Co has built up a stake in Allergan of more than 6 million shares, a position that could make it one of the company's top 10 to 15 shareholders, sources told Reuters Wednesday. And it will back Valeant's merger bid, they say.
Having Paulson on board could give the Quebec-based drugmaker a boost. While it's already allied with Bill Ackman, who heads up leading Allergan shareholder Pershing Square Capital Management, Allergan's poison pill plan currently prevents any single investor from amassing a stake larger than 10%.
And Paulson isn't the only Allergan investor on Valeant's side, Reuters notes. T. Rowe Price, which controls the company's ninth-largest stake, and others are pushing for a deal, sources told the news service.
Pearson has said he expects his company's $53 billion buyout offer to eventually go through, telling The Wall Street Journal that if he does snag enough votes to convene the shareholder meeting he's hoping for, "both sides know how this will come out."
That doesn't mean all of Allergan's shareholders are gung-ho about becoming Valeant's next M&A conquest, however. Dan Davidowitz, a portfolio manager at Polen Capital Management--a top-20 Allergan shareholder--told Reuters that others believe the company should keep its independence based on the value of Valeant's current offer.Allergan CEO David Pyott
And Allergan's board is doing what it can to make sure they stay in that camp. As CEO David Pyott told Reuters earlier this week, investors have asked that Allergan lift earnings and deploy capital through share buybacks or a significant pickup of its own.
"Our goal now is to give them most of what they want," he told the news service.
- read the Reuters story
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